The housing market overcame a listless economy this summer, and several data points on Wednesday show it is finally beginning a long climb out of a deep hole.

Single-family housing starts hit their highest level in 28 months during August, on a seasonally adjusted annual basis, the Commerce Department said Wednesday. Single-family starts were up by 5.5% from July and 26.8% from one year. Starts have been up from one year ago in 11 straight months—and by double digits in each of the last nine months.

Existing-home sales hit their highest level in 27 months in August, which made up for a slower-than-expected June and July, the National Association of Realtors said on Wednesday. Sales of previously owned homes rose by 7.8% from July, the biggest monthly gain in a year, and by 9.3% from one year ago.

At the current sales pace, it would take 6.1 months to sell the listed inventory from August, which is at its lowest level in nearly six years. Normally, a supply of around six months is considered balanced.

Housing inventory is low, but it rose by 2.9% from July, according to the Realtors, leaving it 18.2% below last year’s level. Falling inventory has curbed sales in some markets, particularly in the West, where buying activity has been strong for the past year. Home sales in the West were flat compared with one year ago, while other regions posted strong gains.

Taken together, Wednesday’s numbers point to a housing market that is clearly getting better. Low inventory and strong demand are creating opportunities for home builders that didn’t exist one year ago, when they were scrambling to compete with foreclosed properties. Homebuilder confidence hit a five-year high on Tuesday, according to a separate index. Low mortgage rates are fueling stronger demand from owner-occupant buyers, and not just investors.

There are still plenty of reasons for caution: sales and construction starts are still below even their pre-bubble levels, and the year-over-year comparisons look great because last year was terrible. Tax credits fueled a burst of sales activity in late 2009 and early 2010, and the hangover hit housing markets hard in much of 2011.

The mortgage qualification process is more rigorous, some buyers have too much debt to qualify, and many would-be buyers don’t have enough equity to sell their current residence and buy new ones. Foreclosures are still widespread, though banks have made clear they aren’t able to take the homes back and sell them in one swoop, which should limit any shocks.

Still, many of the concerns earlier this year—that a strong spring was due only to better weather, that a “shadow inventory tidal wave” would overwhelm the market, and that a swift rise in mortgage rates would choke off demand—haven’t been realized. The biggest threat to the housing market is no longer housing itself, but rather the economy.